Showing 1 - 10 of 6,298
Affirmative action policies are practiced around the world. This paper explores the welfare economics of such policies. A model is proposed where heterogeneous agents, distinguished by skill level and social identity, compete for positions in a hierarchy. The problem of designing an efficient...
Persistent link: https://www.econbiz.de/10013135413
We introduce a rational choice theory that allows for many forms of imperfect perception, including failures of memory …, selective attention, and adherence to simplifying rules of thumb. Despite its generality, the theory has strong, simple, and … (stochastic) consequences of their available choices. Our theory separately identifies two distinct "framing" effects: standard …
Persistent link: https://www.econbiz.de/10013123311
This paper develops a model to analyze information aggregation in commodity markets. Through centralized trading, commodity prices aggregate dispersed information about the strength of the global economy among goods producers whose production has complementarity, and serve as price signals to...
Persistent link: https://www.econbiz.de/10013084735
Time-inconsistency of no-bailout policies can create incentives for banks to take excessive risks and generate endogenous crises when the government cannot commit. However, at the outbreak of financial problems, usually the government is uncertain about their nature, and hence it may delay...
Persistent link: https://www.econbiz.de/10013087435
This paper investigates who incomplete information impacts the response of prices to nominal shocks. Our baseline model is a variant of the Calvo model in which firms observe the underlying nominal shocks with noise. In this model, the response of prices is pinned down by three parameters: the...
Persistent link: https://www.econbiz.de/10013152625
The paper analyzes the impact of financial liberalizations and reforms in emerging markets on the dynamics of capital flows to these markets, using a simple model of international investors' behavior. We first show that the gradual nature of liberalizations, combined with the cost of absorbing...
Persistent link: https://www.econbiz.de/10012774900
Policy analysis with potentially misspecified dynamic stochastic general equilibrium (DSGE) models faces two challenges: estimation of parameters that are relevant for policy trade-offs and treatment of estimated deviations from the cross-equation restrictions. This paper develops and explores...
Persistent link: https://www.econbiz.de/10012776935
This paper presents a dynamic stochastic general-equilibrium model with a single friction in all markets: sticky information. In this economy, agents are inattentive because of costs of acquiring, absorbing and processing information, so that the actions of consumers, workers and firms are slow...
Persistent link: https://www.econbiz.de/10012757855
Financial safety nets are incomplete social contracts that assign responsibility to various economic sectors for preventing, detecting, and paying for potentially crippling losses at financial institutions. This paper uses the theories of incomplete contracts and sequential bargaining to...
Persistent link: https://www.econbiz.de/10012760523
This paper studies the implications of financial market imperfections represented by a countercyclical external finance premium and the gradual recognition of changes in the drift of technology growth for the design of an interest rate rule. Asset price movements induced by changes in trend...
Persistent link: https://www.econbiz.de/10012761257